(a)

(1) In determining rates of reimbursement for inpatient hospital services the department shall use the reimbursement policy existing on June 29, 1982. The director shall have authority to modify this reimbursement policy. The director shall implement a new reimbursement policy of peer grouping of hospitals through the promulgation of emergency regulations after required federal approvals are obtained. The department may adjust interim payment percentages to hospitals in order to approximate final settlement and may control or freeze charges in order to carry out this section.

(2) This

section shall cease to apply to a hospital when the department enters into a contract, pursuant to

Article 2.6 (commencing with

Section 14081), either with that hospital or with other hospitals to the exclusion of that hospital for services covered under the contracts. (

b) Notwithstanding any other provision of law, the department may make interim rate adjustments and also implement collection procedures to recover overpayments to hospitals, at tentative and final settlement. These recoveries shall be based on audits or examinations made by or on behalf of the department pursuant to Sections and 14170, including the application of Sections 51536, 51537, and of Title of the California Administrative Code at tentative and final settlement. Recovery may be made whether or not appeals by the hospitals are pending. Collection of overpayments shall be made in accordance with

Section 14172.5. (

c) The amendment of this

section made at the portion of the 1985–86 Regular Session of the Legislature does not constitute a change in, but is declaratory of, the existing law. This declaration shall not apply to any lawsuits filed on or before July 9, 1985. (

d) No new payment system may be implemented without specific authorization from the Legislature. (

e) Notwithstanding any other provision of law, reimbursement for out-of-state acute inpatient hospital services provided to Medi-Cal beneficiaries shall not exceed the current statewide average of contract rates for acute inpatient hospital services negotiated by the California Medical Assistance Commission or the actual billed charges, whichever is less.